In this article we discuss Special Economic Zones in Cambodia (SEZs), including why they were built, the impact they have had in Cambodia and some examples of the business which has been brought in as a result. If you want more in-market information from the experts, view our library of law or market info sections, or get in touch with our international team here.

What are the Special Economic Zones in Cambodia?

Special Economic Zones in Cambodia were first launched in 2005 with the aim of attracting foreign investment, boosting economic growth and creating employment opportunities. 

The government saw the establishment of these Special Economic Zones in Cambodia as a way to promote economic development and attract investors to the country.

The purpose of the SEZ in Cambodia is to provide a favorable environment for businesses to operate in. The zones are designed to offer a range of benefits to investors, including tax incentives, streamlined regulations, and access to infrastructure and services. The government has also made efforts to improve the business climate in the country by reducing bureaucratic hurdles and improving the overall ease of doing business (source)

What are the main benefits of the Special Economic Zone in Cambodia?

One of the main benefits of investing in the Special Economic Zone in Cambodia is the tax incentives that are offered to businesses. 

Companies that operate within the SEZ are exempt from import duties, VAT on imported goods, and other taxes for a period of up to nine years. This reduces the cost of doing business and makes it more attractive for foreign investors to set up operations in Cambodia.

Another key benefit of the SEZ is the access to infrastructure and services. The zones are designed to provide businesses with access to reliable power, water, and other essential services. In addition, the government has invested heavily in improving the transportation infrastructure in the country, making it easier for businesses to move goods and people around.

For an overview, here is the main benefits of the Special Economic Zone in Cambodia:

  • Tax incentives: Businesses operating in SEZs are exempt from corporate income tax for the first nine years of operation, and they also receive a 50% reduction in corporate income tax for the next five years.
  • Customs duty exemptions: Businesses operating in SEZs are exempt from customs duties on imported equipment and materials.
  • One-stop shop for business registration and licensing: The Council for the Development of Cambodia (CDC) provides a one-stop shop for business registration and licensing, which makes it easier and faster for businesses to start operating in SEZs.
  • Access to skilled labor: Cambodia has a young and growing workforce, and the government is investing in education and training to ensure that workers have the skills that businesses need.
  • Strategic location: Cambodia is located in a strategic location, with access to major markets in Southeast Asia, China, and India.

How has the Special Economic Zone in Cambodia helped develop the economy?

The SEZ has been instrumental in helping the development of Cambodia by incentivizing new business and investment in the country. The zones have attracted a wide range of businesses, including manufacturing companies, logistics firms, and service providers. 

These businesses have created new jobs and helped to drive economic growth, particularly in rural areas where employment opportunities are limited.

The presence of these and other businesses in SEZs has had a number of benefits for the Cambodian economy, including:

  • Increased employment: The presence of businesses in SEZs has created jobs for Cambodian workers.
  • Increased exports: The goods produced by businesses in SEZs are exported to markets around the world, which has increased Cambodia’s export earnings.
  • Economic growth: The increased employment and exports have led to economic growth in Cambodia.

How many companies operate in the Special Economic Zone in Cambodia?

As of 2021, there were 25 SEZs operating in Cambodia, with a total of 320 registered companies operating within them. These zones have helped to drive economic growth and attract foreign investment, with the total investment in the zones reaching over $9 billion USD. This has created thousands of new jobs, particularly in the manufacturing sector, which has been a key driver of economic growth in the country.

In conclusion, the Special Economic Zone in Cambodia has been a key driver of economic growth and development in the country. 

These benefits have attracted a number of businesses to SEZs in Cambodia. Some examples of businesses that have come to enjoy the benefits of operating in this area include:

  • Nike: Nike has a factory in the SEZ in Sihanoukville, which employs over 10,000 workers.
  • Samsung: Samsung has a factory in the SEZ in Phnom Penh, which employs over 5,000 workers.
  • Honda: Honda has a factory in the SEZ in Kandal province, which employs over 2,000 workers.

By offering tax incentives, streamlined regulations, and access to infrastructure and services, the SEZ has attracted a wide range of businesses and helped to create new jobs and drive economic growth. As Cambodia continues to develop and modernize, the SEZ is likely to play an increasingly important role in attracting foreign investment and driving economic growth in the country.

Has the Special Economic Zone been a success in Cambodia?

The SEZs have been a success story for Cambodia, and they have helped to make the country a more attractive destination for foreign investment. The government is planning to expand the number of SEZs in the country, and this is expected to further boost economic growth and create jobs.

Who made the decision to create the Special Economic Zone in Cambodia?

The decision to create special economic zones (SEZs) in Cambodia was made by the government in 2005 (source). The government’s decision was based on a number of factors, including the following:

  • The need to attract foreign investment: The Cambodian government wanted to attract foreign investment to help the country’s economy grow. SEZs were seen as a way to attract foreign investment by offering businesses a number of benefits, such as tax breaks and exemptions from customs duties.
  • The need to create jobs: The Cambodian government wanted to create jobs for Cambodian workers. SEZs were seen as a way to create jobs by attracting businesses that would employ Cambodian workers.
  • The need to improve Cambodia’s infrastructure: The Cambodian government wanted to improve Cambodia’s infrastructure, such as roads, bridges, and airports. SEZs were seen as a way to improve Cambodia’s infrastructure by attracting businesses that would invest in infrastructure projects.

Which government ministries were involved in the decision to create Special Economic Zones in Cambodia?

The following ministries were involved in the decision to create SEZs in Cambodia:

  • The Council for the Development of Cambodia (CDC): The CDC is the government agency responsible for promoting economic development in Cambodia. The CDC was responsible for drafting the legislation that created SEZs and for overseeing the development of SEZs.
  • The Ministry of Economy and Finance: The Ministry of Economy and Finance was responsible for providing the financial support for the development of SEZs.
  • The Ministry of Industry and Handicrafts: The Ministry of Industry and Handicrafts was responsible for providing technical assistance for the development of SEZs.